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WASHINGTON – The U.S. Department of Labor today announced today that its Employee Benefits Security Administration is proposing to collect information from plan administrators on a voluntarily basis to establish an online search tool to help America’s workers locate lost retirement savings they earned. Retirement plans, including pension and 401(k) plans, sometimes lose track of people owed benefits due to incomplete recordkeeping, people changing employers and other reasons. In other cases, workers may lose track of their retirement plans after their former employer goes out of business or when companies merge. People in these situations are considered “missing participants.” The SECURE 2.0 Act directs EBSA to establish a search tool to help missing participants and their beneficiaries find their retirement benefits by Dec. 29, 2024. The agency needs assistance from plan administrators to populate its online “Retirement Savings Lost and Found” database. The notice of proposed information collection asks plan administrators to provide the information voluntarily, and it proposes that plan administrators can attach the requested information to their 2023 Form 5500 once they receive instructions on how to do so. “The fundamental purpose of any retirement plan under the Employee Retirement Income Security Act is to pay promised benefits, and the Retirement Savings Lost and Found database will be another tool to help plans do so,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “Our goal, which we believe plan sponsors and administrators share, is making sure that workers and their beneficiaries receive the retirement benefits they earned and were promised. We need to work together to achieve that goal.” The notice describes the specific data elements the agency is seeking and how information may be submitted. EBSA is seeking comments and ideas on how to improve the information request so that the database can successfully connect individuals who have lost track of their retirement plan with the benefits they are owed. EBSA currently conducts extensive investigations into circumstances surrounding missing participants. Since 2017, enforcement efforts have recovered more than $6.7 billion for missing participants and beneficiaries. EBSA is hopeful that this new search tool will help participants and beneficiaries locate their money more quickly and more efficiently, helping plans reduce their missing participant counts.The notice of proposed information collection request can be accessed on the Federal Register website. Written comments on the proposal should be submitted on or before June 17, 2024. Learn more about EBSA and its work to protect job-based healthcare and retirement plans.  

Colorado’s Secure Savings Program Draws in Thousands of Workers The Colorado Sun news source reports that one year after Colorado launched its SecureSavings retirement funding program for workers whose employers didn’t offer one, nearly 55,000 workers have opened an account and started setting aside part of their paycheck. It appears the launch of SecureSavings in 2023 may also have prodded a number of Colorado small businesses to start 401(k) retirement plans, adding more employees to the pool of those having some form of savings plan for retirement. SecureSavings requires Colorado employers to sign on if they have been in business for two or more years, have at least five employees who have worked for them 180 days or more, and don’t currently offer a qualified retirement savings program to employees. These businesses automatically enroll their staff in the program and set up auto-deduction from their paychecks. (Employees may opt out within 30 days if they choose.) An employer may start a private retirement plan program like a 401(k) for employees instead of going the SecureSavings route, and many businesses have done so. The goal is simply to get more employees started on saving for retirement. U.S. Census data indicates 49% of adults nationally age 55 to 66 had no personal retirement savings in recent years. It’s not clear how many Coloradans over 55 have a retirement account, but AARP puts the number at only about 30%. At the time SecureSavings was launched, it was estimated nearly 1 million Coloradans had no access to a retirement plan at work, and as many as 85,000 employers might be eligible for the program. The Sun says demographic data suggests that more than half of employees newly enrolled in SecureSavings are over age 40. Gusto, a company that provides HR and payroll benefits services to small businesses, said the largest effects of the mandate under SecureSavings are seen among low-income workers. For example, the rates of 401(k) enrollment in Colorado have nearly doubled across low-income workers at firms subject to the mandate. Gusto added that data also shows that offering retirement plans has helped small business owners reduce employee attrition by 40% over one year. You can learn more about SecureSavings in our AgeWise Colorado article at https://lnkd.in/gCnCGyj3. (provided by Ken Burrows, AWC Staff writer)

Retirement plans need major changes: NY Times https://ift.tt/zXSEvVC Even as a federal law designed to protect income for retirees turns 50 this year, the cry to reform retirement benefits seems to be growing louder than ever. This rising chorus includes The New York Times, which recently published an article titled, “The $25 Trillion System of Retirement Savings Needs Fixing.” It offers expert opinions on several ways to shore up fiscal protections for private retirement accounts and argues for an expansion of Social Security benefits. The Times noted that the Employee Retirement Income Security Act, which was enacted by President Gerald Ford in 1974, was written at a time when a larger share of Americans were covered by pension plans. Since then, however, many private employers have stopped offering high-cost pensions and have turned to defined contribution plans such as a 401(k). According to the Center for Retirement Research at Boston College, 62% of the nation’s private-sector workers had a pension in 1983, but that share dropped to 18% in 2022. Workplace-based savings plans and privately funded individual retirement accounts (IRAs) have become the norm over time and now encompass more than $25 trillion in assets. “But much of that wealth is held by higher income households, and coverage is far from universal,” the Times noted. “What’s more, there are large gaps in retirement account ownership and participation by race, gender and ethnicity.” The first path to creating a more accessible and equitable system, the article argues, is to expand 401(k) coverage. Because small businesses are less likely to offer them, only about half of the nation’s private employees are covered by one of these retirement plans. Low-income workers are saving less than they used to, while Black and Hispanic workers are saving only a fraction of what their white counterparts are. The report notes that 17 states — including California, Illinois and Maryland — have passed legislation to automatically enroll workers in an IRA-style savings plan if their employer does not offer one. Across the eight states that have actually started these programs, the combined assets total $1.5 billion. A second method for reform would be to make 401(k)s more like pensions. This would require accounts to feature automatic participation, be professionally managed and have guaranteed streams of income for retirees. The Times pointed out that some 401(k) plans have incorporated annuities to “guarantee a fixed income for life.” The article goes on to advocate for better investment advice for IRAs and a reworking of the tax-deferral features for retirement accounts. Across all types of employer-sponsored retirement plans and IRAs, the Times cited data showing that 59% of related tax deferrals went to the top 20% of earners, while only 3.7% of deferrals went to the bottom 40% of earners. Some experts believe that these deferrals could be capped or removed entirel...

Recent findings in South Africa have highlighted concerns regarding employers' non-compliance with retirement fund contributions, particularly in relation to the "two-pot system." Two-Pot System: The two-pot system refers to the practice of employers paying a portion of employees' salaries into a retirement fund (Pot 1) and the remaining portion into a separate account (Pot 2), which is often used for other benefits or expenses. Consequences: A recent study by the South African Retirement Fund Industry (SAFRFI) found that: 1. R4.3 billion shortfall: Employers' non-compliance with retirement fund contributions has resulted in a R4.3 billion shortfall in retirement savings. 2. Two-pot system abuse: The two-pot system is being abused by some employers, who use Pot 2 funds for purposes other than retirement savings. 3. Employee disadvantage: Employees are disadvantaged by this practice, as they miss out on compound interest and retirement benefits. 4. Lack of transparency: There is a lack of transparency in the two-pot system, making it difficult to track and monitor retirement fund contributions. 5. Regulatory concerns: The Financial Sector Conduct Authority (FSCA) has expressed concerns about the two-pot system and the potential for abuse. Recommendations: To address these concerns, SAFRFI recommends: 1. Improved regulation: Strengthening regulations to prevent abuse of the two-pot system. 2. Increased transparency: Implementing measures to increase transparency and monitoring of retirement fund contributions. 3. Employer education: Educating employers about their responsibilities regarding retirement fund contributions. 4. Employee awareness: Raising employee awareness about their retirement benefits and the importance of monitoring their contributions. By addressing these concerns and implementing reforms, South Africa can ensure that employees receive their rightful retirement benefits and that the two-pot system is used for its intended purpose.

Bipartisan Support Continues: a Big Step in the Senate to Give 403(b) Plans Equal Access to CITs We are pleased to report that a leading, bipartisan group of U.S. Senators has introduced a bill that would permit 403(b) plans to include CITs among the investment options offered to plan participants. This follows the House of Representatives' passage of a bill permitting CITs in 403(b) plans, and it marks another significant step toward enhancing investment opportunities for 403(b) plan participants. Key Points: - Bipartisan Momentum: Senator Britt (R) introduced the bill (S.4917), whose co-sponsors include Senators Warnock (D), Cassidy (R), and Peters (D). The bipartisan commitment to addressing this important issue is particularly noteworthy in this election year, and it reflects a shared dedication to improving the nation’s retirement savings framework. - Promoting Investment Parity: The bill would align investment options available in 403(b) plans with those available in 401(k), 457(b), and federal Thrift Savings Plans. This alignment is crucial for fostering a more equitable retirement savings landscape. - Operational Efficiency: Their structure allows for more efficient and cost-effective operation compared to mutual funds that are offered directly to retail investors. - Regulation: CITs, which are offered exclusively to qualified retirement plans and selected by fiduciaries, are subject to the Employee Retirement Income Security Act of 1974 (ERISA). ERISA is administered by the Employee Benefits Security Administration of the Department of Labor. Further, CIT trustees, whether they’re banks or trust companies, are supervised by a national or state prudential banking regulator. Finally, CITs must comply with IRS regulations that provide the special tax treatment that CITs and their investors enjoy. As this important bill moves to the next phase of consideration in the Senate, it is imperative that all stakeholders actively support it. Continued engagement by all stakeholders – retirement plan fiduciaries, participants and service providers – is required to share the compelling policy rationale for this bill and galvanize support for its passage in the remaining legislative days for this Congress.  At Great Gray Trust Company, we remain steadfast in our commitment to this cause. We will continue to contribute our expertise and resources to advocate for Senate approval. Our goal is clear: to ensure that all 403(b) plan participants have access to a full suite of investment options, thereby giving more retirement savers a better chance at better outcomes and creating a more equitable retirement savings system. We urge our allies in the retirement ecosystem to join us in supporting this measure. Let's remain proactive and work together to support the passage of this critical legislation.

How Does The SSA Calculate Your Retirement Benefits? The Social Security Administration (SSA) is an agency in the United States that provides financial support to eligible retirees through Social Security Retirement benefits. This critical aspect of retirement planning is often misunderstood, leading to confusion about benefits calculation. This article explores the main components to how the SSA calculates retirement benefits. Understanding Primary Insurance Amount (PIA) The cornerstone of the SS retirement benefits calculation process rests on the principle of a ‘Primary Insurance Amount’ (PIA). PIA and AIME: The PIA calculation consists of specific percentages applied to portions of an individual’s average indexed monthly earnings (AIME). Up to 35 years of earnings are needed to compute average indexed monthly earnings. Here’s how AIME is calculated. • Select the years with the highest indexed earnings • Add up the indexed earnings for those years • Divide the total by 420, the number of months in 35 years • Round the result down to the nearest dollar. Bend points: Social Security bend points are dollar amounts in the formula used to calculate the Primary Insurance Amount (PIA) that change annually with the national average wage index. Social Security benefits against average indexed earnings, which shows two points where the line bends. Retirement age plus delayed credits factor It’s also crucial to know that the age at which you start collecting social security benefits impacts the monthly benefits you receive for the rest of your life. If you start receiving benefits before your full retirement age, your benefits may be lower. Social security benefit credits play a critical role in benefit calculations. You earn these credits when you work and pay social security taxes. Up to four such credits can be earned each year, which are instrumental in determining your eligibility start date for retirement benefits. How COLA impacts monthly benefits: Another element affecting monthly benefits is the Cost-of-Living Adjustment (COLA), which the SSA uses to ensure that the purchasing power keeps pace with inflation. If there is a measured increase, the monthly benefits in December of the following year receive a monthly increase. Planning for retirement income can be complex, and understanding how your Social Security benefits are calculated is fundamental to this process. Factors such as PIA, AIME, bend points, retirement age, social security credits, and COLA contribute to calculating your eventual benefits. While this article provides an overview of how the Social Security Administration calculates retirement benefits, speaking with a financial professional or directly with the SSA is essential to understand how these calculations impact your situation. Being well-informed about your benefits can help prepare you to make crucial financial decisions that may affect your future.

Why the 'Father of the 401(k)' Regrets Pushing the Retirement Plan Pain Points… Disappearance of Pension Plans: ~ Traditional pension plans, which guaranteed a steady income in retirement, have become increasingly rare. Insufficient Savings: ~ Many American workers are not saving enough for retirement, leaving them financially vulnerable. Financial Risk: ~ 401(k) plans have shifted the financial risk from employers to employees, exposing workers to market volatility and high fees. Facts… Ted Benna's Role: ~ Ted Benna, known as the father of the 401(k), introduced the concept in 1980 while working as a benefits consultant. Decline of Pensions: ~ In 1979, 38% of private-sector workers had traditional pensions. Today, that number has dropped to just 13%. 401(k) Dominance: ~ Employer-sponsored 401(k) plans have replaced pensions as the primary retirement savings tool for many workers. Issues with 401(k) Plans… High Fees: ~ 401(k) plans often come with steep fees that can erode savings over time. Market Volatility: ~ Retirement savings in 401(k) plans are subject to fluctuations in the stock market, adding financial uncertainty. Inadequate Contributions: ~ Many workers do not contribute enough to their 401(k) plans to secure a comfortable retirement. Ted Benna himself has expressed regret over the widespread adoption of 401(k) plans, stating, "I helped open the door for Wall Street to make even more money than they were already making. “The tool was never intended to be the primary means of retirement savings, but it has become just that, increasing financial risk for workers along the way.” Geoff Sanzenbacher, a research economist, explains that while 401(k) plans offer flexibility, they also come with significant drawbacks. If workers do not save enough or choose high-fee investment options, their retirement security is compromised. In summary, while 401(k) plans offer some benefits, the shift from traditional pensions to 401(k)s has left many American workers facing greater financial risks and challenges in securing a stable retirement. If you have an old 401(K), 403(B), 457(B), IRA, TSP, Pension plans, lump sum option is given, Checking/Savings Account, Roth IRA, practically every qualified or nonqualified account There are other options and solutions for you. Let’s connect… Let’s strategize… It’s free!! Get a Financial Education that was NEVER taught in High School or College!! Rai's Biz Operation-Financial Freedom/Tax-Free Tools #military #nursing #retirement #teachers #financialliteracy #NoFamilyLeftBehind #retirement

IAS 26: Accounting and Reporting of Retirement Benefit Plans IAS 26 provides guidelines for the accounting and reporting of retirement benefit plans. It ensures that these plans are transparent and consistent, helping contributors and retirees understand the financial health and operations of their pension funds. In a town of Golden Years, residents contributed to the Golden Pension Fund to secure their retirement. This fund was managed by trusted experts who followed the rules outlined in IAS 26. These rules ensured clarity and trust by laying out how the fund’s finances should be recorded and reported. Here are the key rules of IAS 26: 1. Types of Plans The Golden Pension Fund offered two types of retirement plans: • Defined Contribution Plans: Residents contributed a fixed amount to the fund. The payout depended on how well the investments performed. The fund only needed to report contributions and the fund’s value—there were no guarantees on payouts. • Defined Benefit Plans: Residents were promised specific payouts during retirement (e.g., $1,000 monthly). The fund managers had to calculate whether the fund’s assets could meet these promises. 2. Annual Financial Reporting Every year, the Golden Pension Fund prepared a detailed report that included: • Net Assets Available for Benefits: The total value of investments, cash, and other fund assets. • Actuarial Present Value of Promised Benefits: For defined benefit plans, this was the estimated value of all future payouts, calculated using actuarial methods (considering factors like life expectancy and inflation). • Surplus or Deficit: The difference between the fund’s assets and its promised payouts. A surplus meant the fund had more than enough, while a deficit meant it might struggle to fulfill promises. 3. Specific Costs and Disclosures IAS 26 required the fund to disclose important details like: • Plan Assets: Investments such as stocks, bonds, or real estate used to pay benefits. • Termination Benefits: Payments to workers who left their jobs early, which had to be calculated and disclosed separately. • Redundancy Costs: Extra contributions required during mass layoffs to ensure the fund could cover additional payouts. 4. Actuarial Valuations To ensure long-term stability, fund managers periodically used actuarial techniques to estimate whether the fund could meet its future obligations. This reinforced confidence among contributors that their savings were safe. By following IAS 26, the Golden Pension Fund built trust with its residents. Contributors could see clearly how their money was managed and whether the fund was financially secure. In essence, IAS 26 is about ensuring that retirement benefit plans are transparent, fair, and accountable, giving workers peace of mind as they plan for the future. By CPA Rodgers Ochiko Email: [email protected] #IAS26 #retirementbenefits #financialreporting #accountingstandards